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Greece secures extension to funding, bows to eurozone demands

Agreement removes immediate risk of Athens running out of money next month and possibly being forced out of the euro

February 20, 20153:01PM ETUpdated 4:49PM ET

Greece and its eurozone creditors reached an agreement Friday to extend emergency funding for a further four months, staving off the immediate risk of Athens being forced to exit the euro.

The deal follows days of an often bitter standoff between the new leftist Greek administration — seeking to ditch some of the austerity measures imposed on the country as part of a bailout package — and skeptical eurozone nations, led by Germany, who had accused Athens of trying to shirk its responsibilities.

It also removes the immediate threat of Greece running out of money next month and possibly being forced out of the single currency area. It also provides a breathing space for Athens to try to negotiate better terms relating to longer-term debt relief.

Jeroen Dijsselbloem, the eurozone's top official, said the development "was a first step" in the rebuilding of trust between Greece and its eurozone creditors.

Greek Finance Minister Yanis Varoufakis welcomed the deal, calling it "a small step in the right direction."

"We have avoided a choking deadline," he told reporters after the meeting in Brussels. "The weekend will be one of joy and creativity. We are writing our own reforms," he said.

In the run up to Friday's talks, Greece had already conceded considerable ground. Crucially, it accepted that any extension would be monitored by the European Commission, European Central Bank and International Monetary Fund, a climbdown by Greek Prime Minister Alexis Tsipras, who had vowed to end cooperation with the "troika" inspectors accused of inflicting economic and social damage on Greece.

Athens also said that it would recognize the existing EU/International Monetary Fund program as the legally binding framework and refrain from unilateral action that would undermine fiscal targets.

But even so, Germany demanded more, saying early Friday that "significant improvements" in reform commitments by Athens was needed if an extension were to be granted.

Greek negotiators later pledged not to initiate any "unilateral" measures that would affect the country's budget targets. It also agreed to present a list of reforms based on the current bailout program by Monday.

Officials said an outline deal was reached in preparatory talks involving the Greek and German finance ministers, as well as the managing director of the IMF. It was then agreed by the full 19-member Eurogroup, ending weeks of uncertainty.

"It has been a laborious but eventually a constructive process," International Monetary Fund managing director Christine Lagarde added late Friday.